Group sues SBA, says government ‘defrauded small businesses’

Just a week after the Small Business Administration celebrated record-breaking contract awards to small business owners eligible for government set-asides, a longtime critic filed suit in federal court for an injunction to force SBA to halt some of the practices used in measuring its success.

The Petaluma, Calif.-based American Small Business League, in an injunction addressed to Administrator Marie Contreras-Sweet filed in Federal District Court in San Francisco, argued that the SBA’s “illegal policies” have “defrauded small businesses and small businesses owned by women, minorities and disabled veterans out of hundreds of billions of dollars in government contracts.”

It quotes the Small Business Act’s language noting that “the governmentwide goal for participation by small business concerns shall be established at not less than 23 percent of the total value of all prime contract awards for each fiscal year.” And within that category, the goal states 5 percent for women-owned small businesses, 5 percent for minority-owned firms, and 3 percent for disabled veterans.

But the SBA, the group’s argument goes, “has created a policy they call the ‘exclusionary rule’ and ‘small business eligible dollars’ that uses a significantly lower federal acquisition budget number to calculate the percentage of contracts awarded to all categories of small businesses.”